Arqiva announces strong results for the financial year to 30 June 2016 with record revenues and earnings

Arqiva, the UK’s largest independent towers company and communications infrastructure group, announces record revenues and earnings for the year ended 30 June 2016.

We provide critical infrastructure for use by mobile telecoms network operators, public service TV, radio broadcasters and satellite TV broadcasters

Arqiva, the UK’s largest independent towers company and communications infrastructure group, announces record revenues and earnings for the year ended 30 June 2016:

Revenue of £884.7 million

EBITDA of £424.4 million

Free cash flow of £226.6m, up 22.7%

Order book of £6.1 billion with £0.5bn of gross new contract wins

Arqiva provides critical infrastructure for use by mobile telecoms network operators, public service TV and radio broadcasters, satellite TV broadcasters and, increasingly, deploys devices requiring machine-to-machine connectivity such as smart meters for energy and water.

Mike Parton, Chairman, said:

“I am delighted with the progress the Group has demonstrated during Simon Beresford-Wylie’s first full year as CEO. We have simplified our portfolio and streamlined our organisational structure with a view to increasing efficiency and profitability, at the same time as pursuing our strategic goal of continuing Arqiva’s growth by maximising the capacity utilisation of our infrastructure and diversifying the applications for which our infrastructure can be used. Particularly pleasing was the increase in revenue from the Terrestrial Broadcast division and the Telecoms and M2M division of 4.6% and 6.1% respectively.”

Looking at each division in turn:

Growth in Terrestrial Broadcast revenue was up 4.6%. This was driven by the expansion of the Group’s Digital Terrestrial Television (DTT) multiplex capacity following a number of new contract wins and renewals including Ideal World, UKTV, Sony, QVC, Fox and Discovery. Multiplex related revenues rose 10.6% during the financial year and all 30 streams on Arqiva’s national DTT platform are now fully utilised demonstrating the on-going attractiveness of the terrestrial platform to broadcasters.

Radio-related revenues made a significant contribution as the Digital Audio Broadcast (DAB) radio roll-out continues including BBC national DAB and commercial local DAB network coverage increasing to 97% and 85% respectively, plus the launch of a second national DAB network.

Arqiva entered into a contract with Ofcom, major broadcasters and multiplex operators, to deliver the program to clear TV from 700 MHz spectrum for mobile data use through upgrades and replacements of broadcast station antennae.

Telecoms and M2M experienced significant success with revenue growth, up 6.1%. Arqiva has seen a substantial increase in activities relating to the upgrade of sites this year, bringing the total since the start of the program to 3,250 sites, plus installation of small cells and in-building systems to provide 4G coverage in dense urban areas. In addition, we are supporting EE in deploying its Emergency Services Network.

M2M revenue increased 84%, with Arqiva positioning itself at the heart of this expanding and evolving market, developing smart energy and water metering networks and rolling out networks to 10 major UK cities. The roll-out programme for smart energy metering in the north now exceeds 80% coverage. The build phase for Thames Water’s smart water metering network has completed and is operational, with more than 60,000 meters installed. Since the financial year end, Arqiva has won a multi-year contract with Anglian Water to deliver a trial smart water metering network of 7,500 meters.

In Satellite and Media there was a 5.7% decrease in revenue due to the termination of certain low margin contracts. Capacity utilisation and cost management has been the key focus result in some significant contract wins in the year, as well as being selected by Al Jazeera Media Network to provide its global teleport and satellite distribution services.The Group has also been focused on ensuring the business is as efficient as possible and has sold three non-core businesses, delivered over £30m annualised gross cost savings through efficiency gains and closed its defined benefit pension scheme to future accrual. Since the financial year end Arqiva agreed the disposal of its WiFi business to Virgin Media.

Simon Beresford-Wylie Chief Executive Officer, added:

“I am excited about Arqiva’s future and how we can benefit from opportunities as the communications sector develops. In the last year we have aligned the way we work to better reflect market developments; enhancing customer focus and strengthening our ability to deliver complex projects. We have focused our investment in the right opportunities and projects such as small cells to support 4G and, in the future, 5G growth.

“We continue to work across the industry, including government and regulatory bodies, to maintain our excellent relationships and ensure that Arqiva is an active participant in shaping decisions and influencing trends in the communications infrastructure market to ensure a vibrant digital economy.”

View a copy of the Arqiva Group Limited consolidated annual report and accounts here

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